Out-Sourcing and Off-Shoring and the Make or Buy Decision
Section 1 – Introduction
Read ----Operations Management Readings: Strategic Sourcing Then answer the rest questions 3 - Review the section, ‘An Overview of Strategic Sourcing Decisions’. What are the challenges in determining whether to ‘make’ or ‘buy’? Provide an example to demonstrate pros and cons of each approach. What is the difference between ‘out-sourcing’ and ‘off-shoring’? Why do firms ‘out-source’? What are some of the specific issues this raises? Pick one and describe more fully why this is a challenge?
– Use either the Apple or Crocs case study. Pick one purchased input, that is something that is currently ‘bought’. Assign it to one of the quadrants in the Kraljic Matrix. Justify why it is there. Recommend either keeping it there or moving it to a different quadrant. Justify your recommendation.
Review the section, ‘Competing on Core Competencies’. How do core competencies influence the ‘make-or-buy’ decision?
Review the section, ‘Transaction Cost Economics’. What are transaction costs? How does ‘asset specificity’ relate to an organization’s core competencies? How do ‘bounded rationality’ and ‘opportunism’ influence the decision of whether to make or buy? 7 - Read the article, ‘Aligning Incentives in Supply Chains’. What are some of the incentive problems that firms face? How can they address or prevent incentive problems? Provide a specific example that illustrates the incentive problem and how your recommendation would address it.
Supply Chain
Name Course Instructor Date
1 - How does lengthening or shortening lead time commitments lead to opportunities to improve capacity utilization and throughput?
Customers have a tolerance to lead times for few minutes, and strengthening the lead time commitments necessitates organizations to improve efficiency, capacity utilization and throughput. There is a need for organizations to be more agile to adapt to changing lead times. There is move value generated when there is an improvement in the capacity utilization. Shortening lead time commitments are necessary to streamline operations, improve performance and productivity.
Section 1 – Introduction
2 – What is the difference between ‘out-sourcing’ and ‘off-shoring’? Why do firms ‘out-source’? What are some of the specific issues this raises? Pick one and describe more fully why this is a challenge?
Outsourcing is the process by which a company transfers the responsibilities related to the fulfillment of certain tasks to an external company specialized in the fulfillment of the tasks. In outsourcing, third parties are contracted to perform functions and tasks that are their specialties off-shoring is sending some in-house jobs overseas to be performed there. Firms ‘out-source’ as there are cost advantages and the firms focus more on the core areas. Outsourcing is also preferred when it can lead to faster and better services. Firms prefer out-sourcing when the contracted firms act swiftly and are experts in a field. Furthermore, organizations outsource support services that support the core business process. Outsourcing non-core activities has led to the loss of jobs in the US as companies focus o low cost labor in East Asian countries to reduce their costs and be competitive.
3 - Review the section, ‘An Overview of Strategic Sourcing Decisions’. What are the challenges in determining whether to ‘make’ or ‘buy’? Provide an example to demonstrate the pros and cons of each approach.
A make-or-buy decision refers to a company choosing to manufacturing a product in-house or purchasing the product from a supplier. Comparing the costs and advantage is necessary in the make-or-buy decisions. However, there are different factors that affect costs and advantages and focusing on the short-term effects of the decision often ignores the long-term impact of making or buying. Buying is chosen where a company gets more products or services without an added cost and sharing resources, while there is also a focus on improved efficiency. On the other hand, making or manufacturing allows the company to make products that best fits the company and there is flexibility. Furthermore, making products rather than buying them helps ensure there is high quality control and companies focus on what is most relevant
4 – Use either the Apple or Crocs case study. Pick one purchased input that is something that is currently ‘bought’. Assign it to one of the quadrants in the Kraljic Matrix. Justify why it is there. Recommend either keeping it there or moving it to a different quadrant. Justify your recommendation.
The iPhone camera module is one of the key components for an iPhone and Apple requires this tem for the phones to fully function as intended. Apple contracts third parties in East Asia for making the iPhone cam...